As a seasoned crypto investor with several years of experience, I’ve seen my fair share of market ups and downs. The current Bitcoin price decline is undeniably concerning, but it’s important to remember that the markets are unpredictable, and there’s always a possibility for a bear trap.
The price of Bitcoin is sliding further as the market has dropped crucial support levels. Some investors express concern over a significant market downturn, while others speculate that this decline could be a false alarm, known as a “bear trap.”
Technical Analysis
By TradingRage
The Daily Chart
The day-to-day graph indicates that the price has given way beneath the $60,000 mark of support and now hovers below the approximately $58,000 mark represented by the 200-day moving average.
The 200-day moving average plays a significant role as it has historically supported Bitcoin’s price during past bull markets. When the price fell below this average, those bull markets came to an end. At present, Bitcoin hovers around $57,000, having unsuccessfully attempted to close a daily candle under that mark.
Yesterday’s large downturn indicated by the candle’s shadow may signal that the price drop has ended. In the near future, we could see price stabilization or even a rebound.
The 4-Hour Chart
In the past few weeks, the 4-hour Bitcoin chart displays a prominent downward trend. The value has been forming progressively lower peak and trough prices, shattering through several previous support thresholds.
At present, the cost is attempting to regain the $57,000 mark from its recent decline. If it manages to surpass this threshold, it could renew optimism among investors for an uptrend in the ensuing period.
The RSI moving back up from its oversold state could potentially indicate this trend. Yet, a turnaround isn’t guaranteed while Bitcoin remains under the significant $60,000 threshold.
On-Chain Analysis
By TradingRage
Bitcoin True Hashrate Drawdown
Price analysis provides insights into short-term market trends for Bitcoin (BTC), but a deeper understanding can be achieved through on-chain analysis. The latter approach delves into the underlying fundamentals of the BTC network.
This chart demonstrates the Bitcoin hashrate drawdown, which measures drops in the relative computing power of the network. The hashrate drawdown has reached values even lower than the bear market low of around $16K, pointing to a massive capitulation by the miners.
As an analyst observing the mining sector, I must admit that the mass exit of miners from the market raises some concerns. However, history may repeat itself, as this trend mirrors what occurred in early 2023 when a similar exodus signaled the end of a prolonged downtrend.
Despite the apprehension felt by some regarding the future, avid Bitcoin supporters may be actively amassing as many coins as they can. It remains to be seen, however, whether this is a sign of hitting rock bottom in the market or merely the start of an extended bear trend.
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2024-07-07 10:38